China's April forex reserves drop for first time in 6 months

Published Tue, May 7 2019 4:43 AM EDT

BEIJING, May 7 (Reuters) - China's foreign exchange reserves unexpectedly fell for the first time in six months in April, despite recent data that suggested the world's second-largest economy is starting to steady in response to stimulus measures.

The decline in China's reserves, the world's largest, was modest, however, falling $3.81 billion last month to $3.095 trillion, central bank data showed on Tuesday.

For much of last year, global investors worried about the risk of capital flight from China as the economy cooled, and debated how much Beijing would allow the yuan currency to weaken, though strict capital controls kept outflows in check.

Unexpectedly strong March data suggested the economy is slowly getting back on steadier footing, but an unexpected escalation in U.S.-China trade tensions this week has put the yuan back under pressure and revived concerns over Chinese growth.

In April, the yuan fell 0.3 percent against the dollar, while the dollar inched up 0.2 percent against a basket of major currencies .

The yuan fell 5.3 percent against the dollar last year as trade relations with the United States deteriorated and the Chinese economy slowed. Despite sharp losses on Monday following fresh U.S. tariff threats, the yuan is still up 1.6 percent against the dollar so far this year.

The value of China's gold reserves fell to $78.35 billion from $78.525 billion at the end of March.